Growing Champions: AI can help propel Malaysia towards continued equitable growth
06 May 2023
Artificial intelligence (AI) offers an increasingly powerful platform to unlock opportunities in our daily lives. Trending solutions such as ChatGPT might be capturing the headlines, but below the surface there are countless AI-driven solutions that could have positive implications for Malaysia’s future growth.
This potential has not gone unnoticed. The revised Budget 2023 saw the announcement of RM1 billion in funds from Bank Negara Malaysia that will go into helping micro, small and medium enterprises (MSMEs) automate their processes and digitalise their businesses. With MSMEs forming the bedrock of Malaysia’s economy, this could offer a particularly transformative opportunity to uplift underserved communities in the country.
AI-empowered growth could help boost access to education, improve financial inclusion, and ensure vital loans to enable business success. This not only offers a path to nurturing a maturing economy but can ultimately help address inequalities through aspirational digital growth.
There are already encouraging signs of expanding digital connectivity. Digital Nasional Bhd (DNB) recently highlighted that the national 5G network had achieved almost 50% coverage of populated areas, surpassing its target of 40%. Hurdles will still need to be addressed, not least the digital divide between rural communities and metropolitan centres such as Kuala Lumpur.
The government believes its ambitions to develop “Malaysia Madani” will be critical to closing the inequality gap, placing essential emphasis on poverty alleviation, promoting sustainable growth and deepening support for MSMEs. As Malaysia looks to unlock this future of equitable growth, AI can work to help bridge the gap and build a future of shared prosperity for the rakyat.
Platform to power up growth
AI offers a platform to empower enterprises across the Malaysian economy, from major multinationals down to MSMEs that make up over 95% of total business establishments. It offers a path to reduce monotonous tasks, enhance efficiency and empower newly upskilled workers through AI-driven tools and capabilities.
At BCG X, the new tech build and design division of Boston Consulting Group, we have seen how genuine end-to-end AI-driven transformation unlocks value for stakeholders across the ecosystem. Our experience tells us that the benefits of AI are not theoretical; they are already being realised by enterprises across industries and markets. For example, telcos are using it to deliver enhanced personalisation and real-time business analytics, which could contribute to an increase in sales and enhanced customer satisfaction.
The opportunities in industries such as finance could be even more impactful. Financial inclusion remains a key government priority, supporting improved financial resilience for communities with little or no savings and no engagement with formal banking systems. With more than half of Malaysia’s adult population still underbanked or unbanked, AI could unlock increasingly targeted products and services to further enhance financial access.
MSMEs are now the biggest beneficiaries of digital banks in Malaysia, with lower operating costs and more personalised solutions offering more cost-effective answers that meet the needs of these diverse enterprises. Legacy banks are now beginning to realise the value of their own data lakes, offering a pathway for AI to further transform opportunities. This is a particularly powerful opportunity in the Asia-Pacific region, which is a global trailblazer in delivering profitable digital banking enterprises.
Malaysia’s vibrant agricultural industry is also likely to benefit from the uplift driven by deepening technology adoption. Under the revised Budget 2023, RM20 billion in loans will be allocated to MSMEs in specific sectors, agriculture being one of them. Technology grants will also be provided to encourage private-sector investment in large-scale agriculture. We believe AI will offer an equally powerful opportunity here as companies leverage these sophisticated technologies to enhance precision farming and improve farming decisions.
The energy sector, one of the most important sectors in Malaysia, can also derive great value from AI. AI can help increase asset productivity by delivering more accurate optimisation options, improve operations by giving operators in the plant better context and relevant guidelines, or increase production by anticipating equipment failure.
To make the most of this technology, companies will need to innovate, build and execute solutions, going beyond prototyping to transform core business operations. We, at BCG X, understand how important this is, having helped clients meet this need with our proprietary algorithms, which are backed by custom products that integrate into clients’ unique tech stacks. Our capabilities will be enhanced by our collaboration with OpenAI, inventor of the iconic ChatGPT, further aiding clients in responsibly solving complex problems with generative AI.
AI can nurture innovation across industries
Innovation is tough. Just 30% of companies think they are good at it, and it is becoming more complex by the year. Even the most innovative enterprises and individuals need to constantly master new capabilities and develop new skill sets at an increasingly rapid pace.
AI will be critical in answering fundamental challenges in this modern business landscape and building an environment that empowers equitable opportunity. Our colleague Sylvain Duranton, global leader at BCG X, asserts that generative AI will offer a profound opportunity that could ultimately aid in solving some of the most complex problems facing the world today.
This does not come without challenges; the most notable is the need to address public mistrust. Companies can bridge this trust gap by adopting what BCG X calls “responsible AI”. This includes six steps: (a) empower responsible AI leadership;
(b) develop principles, policies and training; (c) establish human AI and governance; (d) conduct responsible AI reviews; (e) integrate tools and methods; and (f) build and test a response plan.
As industry boundaries blur and the pace of competitive innovation increases, companies — incumbents and newcomers alike — are both emulating and partnering with start-ups to turbocharge their innovation engines. This is not surprising, as an entrepreneurial mindset will be key to the effective deployment of AI. That is why we believe corporate ventures will play an important role in accelerating innovation strategies. In this regard, it is crucial for companies to think about venturing from end-to-end, from developing their products and technology to building their business models and go-to-market strategies.
New dawn of opportunity with AI in Malaysia
Deepening penetration of AI solutions in both business-to-customer (B2C) and business-to-business (B2B) arenas could spur a new dawn of equitable opportunities in Malaysia, with powerful use cases across technology, media, telecommunications, finance, agribusiness and beyond.
Companies will play an important role in catalysing this opportunity as well as addressing and advancing pressing nationwide issues in the B2B, B2C and social spheres. Investing and corporate venture commitment will be key to innovating effective AI-driven solutions.
As we advance into this new future, AI will unlock fresh opportunities to serve the underserved. Bridging the trust gap will be vital in realising this potential, but in doing so we can empower an equitable ecosystem of growth that benefits business, the economy and the rakyat.
Jaime Ruiz-Cabrero is a managing director and senior partner, and head of BCG Southeast Asia. Hanno Stegmann is a managing director and partner at BCG X.
Source: The Edge Malaysia